Retailers shift their ad spending from TV, radio and print ads to digital ads.
The temperature is rising so it’s time to start thinking about Christmas. Here’s what some retailers are doing to make sure they are ready for the rush.
It may have been spring to most retailers, but to apparel retailer Roots Canada Ltd., it was Christmas in May. The weekend of May 3 and 4, Roots processed more than triple its usual number of orders, close to the volume it expects to handle on peak days in this year’s holiday shopping season.
Every year, Roots runs three weekend promotions-one each in spring, summer and fall-to test how its web sites can perform under conditions similar to what it expects during the fourth quarter holiday shopping season.
“We do about a third of our sales in the last eight weeks of the calendar year,” says James Connell, director of e-commerce, digital marketing and new media. “And we find that sales ramp significantly higher online than in our stores as a percentage increase.” So it’s crucial, he adds, to make sure long before the Thanksgiving kick-off to the holiday shopping season to ensure that things like e-commerce technology, merchandising plans, fulfillment operations and employee skills are up to the job while there’s still time to shore up weaknesses.
Beating the economy
The 2008 holiday season presents a mix of challenges and opportunities that call upon e-retailers to be prepared, experts say. While a tough economy this year is likely to crimp overall holiday retail sales, research indicates that the online retailing channel will perform relatively well.
Despite a poor economic outlook heading into the 2007 holiday season, only 15% of online holiday buyers reduced their online spending because of the overall economy, while 24% said economic issues had no effect on their online spending, JupiterResearch says in a report released in April, “Holiday 2007 Postmortem: Comparing Online and Off-line Sales Growth.”
As a result, 2007 online holiday sales remained strong compared to offline sales, growing 20% over the prior year, according to Jupiter, and 19%, according to web measurement firm comScore Inc. While 2007 growth represented a slowdown from the 26% growth that comScore reported in 2006 over 2005, online holiday sales still far outpaced the 4% growth in total retail sales.
To be sure, online retailers will face increased pressure this year from an economy more pinched than a year ago, even if web sales remain strong. In addition to rising fuel costs that result in surcharges from shipping companies, online merchants will likely face consumers looking for more bargains. “Especially in the U.S., the economy is not looking great, and many consumers will turn to the web to look for value,” says Gene Alvarez, vice president and retail analyst at advisory firm Gartner Inc.
At the same time, while online retailers compete for shoppers with the latest in merchandising displays and web site functionality, consumers will demand ease and speed in online shopping. The overall challenge presents tough choices for e-retailers. They can try to attract shoppers with state-of-the-art features like online video and other interactive rich media presentations, but they may risk alienating shoppers with a poor shopping experience if new complex features trip up busy holiday shoppers looking for a fast checkout.
“Interactive Web 2.0 technology is taking on more prominence, but succeeding in the holidays is really about letting shoppers find products and check out quickly,” says Rob Garf, vice president of retail strategies at research and advisory firm AMR Research Inc. “So it’s vital that retailers ensure that pages load reliably and test their inventory management system to ensure that what appears on their web site is actually available and doesn’t result in a canceled order. Busy holiday shoppers won’t put up with a canceled order and will probably find someplace else to shop.”
Planning for each year’s peak holiday shopping season is never-ending, as most retailers try to learn what went right or wrong after closing out one season to better plan for the next. Although long-range, ongoing plans may include major web site upgrades and changes in retailing strategies, there are also many things merchants can do throughout the first 10 months of the year to maximize business in the final two.
Holiday season preparation strategies for online retailers fall into two general categories: long-term projects for upgrading infrastructure, site design, shopping features and customer service levels; and more short-term marketing, merchandising and customer service projects, which may be subsets of longer ones, that retailers should consider in the last few months leading to the holiday season and even throughout the season, experts say.
Among the relatively quick fixes and upgrades that can have the biggest effect on engaging and converting holiday shoppers, according to analysts and retailers, are:
Deploying product-comparison tools to help shoppers decide what to buy, especially in consumer electronics and other products with multiple specifications that consumers often like to compare. “These can be invaluable in helping shoppers decide how much to spend,” Alvarez says. Most retailers could deploy a product-comparison tool within 90 days, he adds.
Updating an online store locator to ensure it is accurate. Although the ideal is a system that automatically updates store data as retailers close stores and open new ones, retailers should at least manually check and update store locators just before the Thanksgiving weekend.
Deploying a customer ratings and reviews application, a process that can take about 90 days, Alvarez says. Although it can take much longer than 90 days to get a system populated with a large amount of content, any customer-generated content can help win over other shoppers, and the holiday season is an ideal time to attract content, he adds. Moreover, products rated highly by customers have return rates 26% lower than those of unrated products, says Fiona Dias, executive vice president of partner strategy and marketing for e-commerce technology and services provider GSI Commerce Inc.
Offering gift finders that recommend gifts. These typically produce higher average order values, Dias says.
Planning a gift card program. Although these are most effective during the last days of the holiday shopping season as shoppers run out of specific ideas for gifts, retailers should begin promoting them in September to make early shoppers aware of them, says Ken Burke, chairman and founder of e-commerce platform provider MarketLive Inc.